What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-03-30 compared with 2025-03-10 · 111 added, 171 removed, 441 unchanged (39% of the section changed)

79 unchanged sentences

our product candidates, if approved, we may require substantial additional funding in the future.

B Preferred Stock Financing

November 13, 2025, we entered into a Securities Purchase Agreement (the “Purchase Agreement”) with an institutional investor

(the “Purchaser”) providing for (i) a registered direct offering and (ii) a concurrent private placement (collectively, the

“Offerings”).

The registered direct offering closed on November 14, 2025.

the registered direct offering, the Company issued 1,513 shares of Series B Preferred Stock, par value $0.0001 per share (the “Preferred

Stock”), convertible into 665,922 shares of common stock, par value $0.0001 per share (the “Common Stock”, the “Underlying

The Preferred Stock has a stated value of $1,100 per share, was sold at $1,000 per share, and is convertible into Common

Stock at a conversion price of $2.50 per share, subject to customary anti-dilution adjustments.

The Preferred Stock and the Underlying

Shares were issued pursuant to an effective registration statement on Form S-3.

the concurrent private placement, the Company issued 2,487 unregistered shares of Preferred Stock convertible into up to 1,094,078 shares

of Common Stock, subject to adjustment, as well as warrants (the “Warrants”) to purchase up to 880,000 shares of Common Stock,

subject to adjustment.

The Warrants have an exercise price of $2.50 per share, subject to customary anti-dilution adjustments, are exercisable

beginning six months after issuance, and expire on the fifth anniversary of the later of (i) the effectiveness of a resale registration

statement covering the Warrants and (ii) receipt of required stockholder approval (“Stockholder Approval”).

The Company evaluated the terms of the

Series B Preferred Stock for embedded features that may require bifurcation as derivative instruments under ASC 815.

Certain features

were identified that met the definition of a derivative.

However, the Company concluded that the fair value of such features was not

material to the financial statements and accordingly did not recognize them as separate derivative liabilities.

The Company will continue

to reassess this conclusion at each reporting period.

April Warrant Inducement

April 2025, we entered into an Inducement Letter with certain warrant holders for the exercise of certain outstanding warrants to purchase

up to an aggregate of 630,376 share of our common stock, par value $0.0001 per share.

The warrants were issued in March 2025 with an

exercise price of $3.24 share.

The shares of common stock issuable upon exercise of such outstanding warrants are registered pursuant

to an effective register statement on Form S-3.

consideration for the immediate exercise of the warrants for cash and the payment of an additional $0.125 per new unregistered warrant

(an additional $157,594 included in our gross proceeds), pursuant to the Inducement Agreement, we agreed to issue and sell unregistered

warrants to purchase shares of common stock.

The new warrants (the “ Common Warrants ”) are exercisable for an aggregate

of up to 1,260,752 shares of common stock.

The Common Warrants have an exercise price of $1.90 per share and are immediately exercisable

for shares of common stock.

One half of the Common Warrants will expire after eighteen (18) months and the other half will expire after

five (5) years.

Our gross proceeds from the exercise of the warrants and payment for Common Warrants was approximately $2.2 million,

prior to deducting placement agent fees and estimated offering expenses.

utilized a placement agent for the 2025 April Warrant Inducement and incurred approximately $0.3 million in legal fees and other closing

Additionally, we issued to the placement agent as compensation unregistered warrants to purchase up to 44,126 shares of common

stock, equal to 7.0% of the aggregate number of shares of Common Stock (or warrants) placed in the transaction.

The placement agent warrants

expire on April 24, 2030, and have an exercise price of $4.05 per share of common stock.

The closing of the offering occurred on April

Registered Direct Offering and 2025 March Warrant Offering

March 2025, we entered into a Stock Purchase Agreement with certain institutional investors, pursuant to which we agreed to issue and

sell in a registered direct offering, (i) an aggregate of 239,594 shares of common stock, par value $0.0001 per share at an offering

price of $3.49 per share, (ii) pre-funded warrants to purchase up to 75,594 shares of common stock, at a price per pre-funded warrant

equal to $3.4899, the price per share less $0.0001, for gross proceeds of approximately $1.1 million before the deduction of placement

agent fees and offering expenses.

The pre-funded warrants were fully exercised as of March 31, 2025, and the related common shares were

issued in April 2025.

a concurrent private placement, pursuant to the terms of the SPA, we also agreed to issue and sell unregistered warrants to purchase

up to 315,188 shares of Common Stock (the “ Series A-5 Warrants ”), and Series A-6 warrants to purchase up to 315,188

shares of Common Stock (the “ Series A-6 Warrants ”), to purchase up to an aggregate 630,376 shares of Common Stock.

The warrants have an exercise price of $3.24 per share and are exercisable immediately.

The Series A-5 Warrants will expire eighteen

(18) months after issuance and the Series A-6 Warrants will expire five (5) years after issuance.

The warrants contain customary anti-dilution

adjustments to the exercise price, including for share splits, share dividends, rights offering and pro rata distributions.

agreed to pay the placement agent a cash fee equal to 7% of the aggregate gross proceeds of the offerings or $77,000.

We also agreed

to pay the placement agent $65,950 for expenses.

We also issued to the placement agent warrants to purchase up to 22,063 shares of common

These warrants have an exercise price equal to $4.3625 per share and are exercisable for five years.

Registered Direct Offering and 2024 August Warrant Inducement

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exercise price per Existing Warrant).

October 23, 2023, we entered into a Securities Purchase Agreement (the “SPA”) for an aggregate financing of $1.7 million

with investors, including $0.2 million with a board member.

At the first closing under the SPA, which occurred on October 25, 2023, we

issued to the investors (i) senior secured convertible promissory notes in the aggregate principal amount of $612,000 for an aggregate

purchase price of $566,667 and (ii) warrants to purchase 83,714 shares of our common stock in the aggregate.

At the second closing under

the SPA, which occurred on November 28, 2023, we issued to the investors referenced above, (i) additional notes in the aggregate principal

amount of $1,224,000 for an aggregate purchase price of $1,133,333 and (i) additional warrants to purchase 167,427 shares of the common

stock in the aggregate.

The notes matured on April 25, 2024 and May 28, 2024, respectively.

combined notes are subject to an original issue discount of 8%, have a term of six months from their respective date of issuance and

accrue interest at the rate of 6.0% per annum.

The notes are convertible into common stock, at a per share conversion price equal to

Beginning ninety days following issuance of the notes at the first closing and second closing, respectively, we are obligated

to redeem monthly one third of the original principal amount under the applicable note, plus accrued but unpaid interest, liquidated

damages and any other amounts then owing to the holder of such note.

We are required to pay the redemption amount in cash with a premium

of 10% or, at the election of the investor at any time, some or all of the principal amount and interest may be paid by conversion of

shares under the note into common stock based on a conversion price equal to $23.51.

Conversions and repayments of principal and interest

on the notes in January and February 2024 totaled $1.7 million.

warrants have an exercise price of $23.51 and are exercisable for five years following issuance on each of the first and second closing

dates under the SPA.

Warrants for 88,261 shares of common stock were exercised in January 2024.

May 12, 2023, we completed a public offering of an aggregate of 120,059 shares of its common stock at par value $0.0001 per share (including

pre-funded warrants in lieu thereof), Series A-1 warrants to purchase up to 120,059 shares of common stock and Series A-2 warrants to

purchase up to 120,059 shares of common stock, at a combined public offering price of $58.31 per share (or pre-funded warrant in lieu

thereof) and accompanying warrants.

The Series A-1 warrants have an exercise price of $54.60 per share, are exercisable immediately upon

issuance and expire five years from the date of issuance, and the Series A-2 warrants have an exercise price of $54.60 per share, are

exercisable immediately upon issuance and expire eighteen months from the date of issuance.

of a warrant issued in the offering will not have the right to exercise any portion of its warrants if the holder, together with its

affiliates, would beneficially own in excess of 4.99% (or 9.99% at the election of the holder prior to the date of issuance) of the number

of shares of Common Stock outstanding immediately after giving effect to such exercise;

provided, however, that upon 61 days’ prior

notice us, the holder may increase or decrease the beneficial ownership limitation, provided that in no event shall the beneficial ownership

limitation exceed 9.99%.

Gross proceeds from this offering are approximately $7.0 million before the deduction of placement agent

fees and related costs of $0.7 million.

The Series A-1 and Series A-2 warrants were repriced to $19.65 per share and exercised in February

Wainwright & Co.

acted as the exclusive placement agent for the offering.

We also registered warrants issued to the placement agent

to purchase 8,404 shares of common stock at a per share exercise price of $72.882, which is 125% of the price of the shares in the offering.

connection with the offering, we amended certain existing warrants to purchase up to an aggregate of 14,006 shares of our common stock

that were previously issued in September 2021 through December 2022 to purchasers in the offering at exercise prices ranging from $252.00

to $2,808.00 per share, such that the amended warrants have a reduced exercise price of $54.60 per share, at an additional offering price

of $1.875 per amended warrant.

February Offering

February 2, 2023, we entered into a definitive Securities Purchase Agreement with certain institutional investors , pursuant to which

we agreed to issue and sell in a registered direct offering, priced “at-the-market” under the rules of The Nasdaq Stock Market,

an aggregate of 19,842 shares of our common stock, par value $0.0001 per share, at an offering price of $151.2 per share, for gross proceeds

of approximately $3.0 million before the deduction of placement agent fees and related costs of $0.3 million.

The closing of the Offering

occurred on February 6, 2023.

a concurrent private placement, we issued to the institutional investors, for each share of common stock purchased in the offering, a

common warrant to purchase one share of common stock.

The common warrants are exercisable immediately upon issuance and terminate five

and one-half years following issuance.

The common warrants have an exercise price of $128.70 per share and are exercisable to purchase

an aggregate of up to 19,842 shares of Common Stock and expire on August 7, 2028.

A holder of a common warrant will not have the right

to exercise any portion of its warrants if the holder, together with its affiliates, would beneficially own in excess of 4.99% (or 9.99%

at the election of the holder prior to the date of issuance) of the number of shares of common stock outstanding immediately after giving

effect to such exercise;

provided, however, that upon 61 days’ prior notice to us, the holder may increase or decrease the beneficial

ownership limitation, provided that in no event shall the beneficial ownership limitation exceed 9.99%.

Wainwright & Co.

acted as the exclusive placement agent (the “ Placement Agent ”) for the offering.

We issued placement

agent warrants to purchase up to 1,389 shares of common stock to the Placement Agent (including its designees).

These warrants have an

exercise price equal to $189.00 per share and are exercisable for five years from the commencement of sales in the offering.

warrants and placement agent warrants and the shares of our common stock issuable upon the exercise of the common warrants and placement

agent warrants are not being registered under the Securities Act of 1933, as amended, are not being offered pursuant to the Registration

Statement, and are being offered pursuant to the exemption provided in Section 4(a)(2) under the Securities Act of 1933 and Rule 506(b).

the Securities Purchase Agreement, we agreed not to issue, enter into any agreement to issue or announce the issuance or proposed issuance

of any shares of common stock or any securities convertible into or exercisable or exchangeable for Common Stock for a period of 30 days

following the closing of the offering.

Our officers and directors agreed, subject to limited exceptions, for a period of 90 days after

the closing of the offering, to not offer, sell, contract to sell, hypothecate, pledge or otherwise dispose of, directly or indirectly,

or establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section

16 of the Securities Exchange Act of 1934, as amended, with respect to, any shares of common stock or securities convertible, exchangeable

or exercisable into, shares of common stock beneficially owned, held or thereafter acquired by them.

December Offering

December 7, 2022, we entered into an underwriting agreement with Lake Street Capital Management, LLC (the “ Underwriter ”),

pursuant to which we agreed to issue and sell (i) 12,667 shares of our common stock, par value $0.0001 per share, (ii) pre-funded warrants

to purchase 3,445 shares of common stock and (iii) warrants to purchase 32,223 shares of common stock to the Underwriter in a public

In addition, we granted the Underwriter the option, for 45 days from the closing of the offering, to purchase up to 1,900 additional

shares of common stock and common warrants to purchase up to an additional 4,834 shares of common stock.

The Underwriter agreed to purchase

our shares pursuant to at a price of $234.30 per share.

lieu of a purchase of common stock that would otherwise result in an investor’s beneficial ownership exceeding 4.99% (or, at the

election of the investor, 9.99%) of the outstanding common stock, a pre-funded warrant was offered, each of which enables the investor

to purchase one share of common stock at an exercise price of $0.0001.

Each pre-funded warrant was exercisable upon issuance and will

expire when exercised in full (all pre-funded warrants were exercised immediately upon issuance).

Each pre-funded warrant was sold with

a common warrant to purchase two shares of common stock.

The public purchase price of one share of common stock and accompanying common

warrant to purchase two shares of Common Stock is $252.00 and the combined purchase price of one pre-funded warrant and accompanying

common warrant to purchase two shares of common stock is $252.00.

common warrant is exercisable immediately at an exercise price of $252.00 per share and will expire five years following the date of

The offering closed on December 9, 2022 and we received aggregate gross proceeds of approximately $4.1 million from the Offering.

June 30, 2022, we entered into an $8.0 million convertible financing agreement with institutional investors.

The agreement provided for

two closings, each for notes payable of $4.24 million (resulting in gross cash proceeds of $4.0 million).

Funds were received for the

first closing on July 1, 2022 and for the second closing on August 9, 2022.

The remaining amount of principal and interest on the 2022

Notes was repaid in the first quarter of 2023.

We were obligated under the 2022 Notes to pay additional cash as true-up payments for

interest or redemption amounts that we paid in shares of common stock that were valued below $361.05 or the lower conversion price of

$135.15 in effect between January 12, 2023 and May 12, 2023.

The true-up payments compensate the holder for the difference between the

value of a share and the conversion price in effect at the time of redemption, multiplied by the number of shares paid.

The true-up payments

totaling $0.6 million were paid on May 12, 2023.

connection with each of the first and second closings of the 2022 Notes we also issued warrants to purchase 2,594 shares of our common

The warrants have a current exercise price of $54.60 and are exercisable for five years following issuance of the 2022 Notes.

of Our Operating Results

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Income (Expense)

in fair value of convertible notes

2022 Notes were accounted for under ASC 480 – Distinguishing Liabilities from Equity, due to share settlement features contained

within the notes.

We used a discounted cash flow model and a Monte Carlo simulation to estimate the fair value of the notes, both of

which rely on unobservable Level 3 inputs.

Changes in the fair value of the notes are recognized through earnings for each reporting

in fair value of liability classified warrants

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interest expense.

Interest expense related to the 2022 Notes was included in the estimate of fair value of the convertible notes.

for Income Taxes

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and 2024, we continue to maintain a full valuation allowance against all of our deferred tax assets based on our evaluation of all available

in 2022, the Tax Cuts and Jobs Act, or the Tax Act, eliminated the option to deduct research and development expenditures currently and

requires taxpayers to capitalize and amortize them over five or fifteen years pursuant to Internal Revenue Code Section 174.

not impacted our effective tax rate or our cash tax payable in 2024;

however, if the requirement to capitalize Section 174 expenditures

is not modified, it may also impact our effective tax rate and our cash tax liability in future years.

file income tax returns in the United States federal tax jurisdiction and state jurisdictions and may become subject to income tax audit

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of the Years ended December 31, 2025 and 2024

Ended December 31,

and development

and administrative

Year Ended December 31,

Federal grants

Operating expenses:

from operations

Research and development

General and administrative

Total operating expenses

Loss from operations

(10,240,946 )

income (expense):

on conversions and change in fair value of convertible notes

in fair value of liability classified warrants

income and expense, net

other income (expenses), net

Other income (expense):

Change in fair value of liability classified warrants

Interest expense

Other income and expense, net

Total other income (expenses), net

$ (10,176,187 )

$ (7,987,009 )

loss attributable to noncontrolling interests

dividend related to warrants down round provision

loss attributable to common stockholders

$ (2,189,178 )

Net loss attributable to noncontrolling interests

Deemed dividend related to warrants down round provision

Net loss attributable to common stockholders

$ (10,175,700 )

$ (7,987,225 )

$ (2,188,475 )

from federal grants totaled $5.1 million for the year ended December 31, 2025, compared to $5.2 million for the year ended December 31,

2024, respectively.

The $3.0 million difference is due to the timing of research activities eligible for funding, with increased activities

under the OUD grant following the selection of a lead drug candidate in June 2024 and funding under the newly awarded MPAR grant which

began in September 2024.

The $0.1 million difference is due to the timing of research activities eligible for funding under the OUD and MPAR

A decrease of $2.1 million in funding under the OUD grant that ended in August 2024 was offset by an increase of $2.0 million

in funding under the MPAR grant which began in September 2024.

and Development Expenses

and development expenses were $10.4 million for the year ended December 31, 2025, compared to $7.2 million for the year ended December

31, 2023, respectively, representing a decrease of $0.4 million.

The decrease was primarily the result of reduced external research and

development costs related to clinical and pre-clinical programs for PF614 and PF614-MPAR, with decreased clinical trial activity for

both programs in the 2024 period.

We do not currently track expenses on a program-by-program basis.

31, 2024, respectively, representing a increase of $3.2 million.

The increase was primarily the result of external research and development

costs related to increased clinical and pre-clinical programs for PF614 and PF614-MPAR.

We expect future research and development expenses

to increase once we begin the Phase 3 clinical trial for PF614, with such timing dependent upon our ability to raise capital sufficient

to fund these expenses.

and Administrative Expenses

and administrative expenses were $4.9 million for the year ended December 31, 2025, compared to $4.7 million for the year ended December

31, 2023 respectively, representing a decrease of $0.6 million.

The decrease was primarily a result of reduced stock-based compensation

We expect future general and administrative expenses to approximate current levels.

31, 2024 respectively, representing an increase of $0.2 million.

We expect future general and administrative expenses to approximate

current levels.

Income and Expense

income and expense for the year ended December 31, 2025, consisted primarily of interest income from cash and cash equivalents.

income and expense for the year ended December 31, 2024, consisted primarily of interest expense associated with the amortization of

the original issue discount and the debt issuance costs for the 2023 Notes and represented a net change in other income and expense of

$1.3 million compared to the year ended December 31, 2023.

The comparative period for 2023 consisted primarily of changes in fair value

associated with the 2022 Notes and the liability-classified warrants.

the original issue discount and the debt issuance costs associated with the 2023 Notes.

and Capital Resources

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following table summarizes our cash flows for each of the periods presented:

Ended December 31,

cash used in operating activities

$ (7,502,700 )

Year Ended December 31,

Net cash used in operating activities

$ (7,806,292 )

cash provided by financing activities

increase (decrease) in cash and cash equivalents

$ (7,502,700 )

Net cash used in investing activities

Net cash provided by financing activities

Net increase in cash and cash equivalents

the years ended December 31, 2025 and 2024, we used cash in operating activities of $7.8 million and $7.5 million, respectively.

decrease primarily resulted from additional revenue cash inflow from grant funding and a reduction in research and development activities

increase primarily result from the timing of vendor invoicing and payments.

the year ended December 31, 2025, net cash provided by financing activities was $8.7 million, primarily consisting of net proceeds from

the August 2024 public offering $1.7 million, warrant exercises and warrant inducements of $9.1 million, net of transaction costs, less

repayment of convertible notes of $0.5 million and financed insurance premiums of $0.4 million.

During the year ended December 31, 2023,

net cash provided by financing activities was $8.8 million, primarily consisting of net proceeds from 2023 February and 2023 May offerings

of $8.7 million and net proceeds from 2023 Notes of $1.6 million, less the repayment of financed insurance premiums of $0.5 million and

cash payment of 2022 Notes of $1.0 million.

Series B Preferred stock financing, warrant inducements, a public offering of common stock and warrant exercises.

During the year ended

December 31, 2024, net cash provided by financing activities was $9.9 million, primarily consisting of net proceeds from the August 2024

public offering, warrant exercises and warrant inducements, net of transaction costs, less repayment of convertible notes of million

and financed insurance premiums.

primary use of cash is to fund operating expenses, primarily related to our research and development activities.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis